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RBI to maintain soft bias

CREDIT POLICY

The Monetary Policy for the first half of 2002-03 says that the RBI will continue to maintain the current interest rate environment with a bias towards softer interest rate regime in the medium-term.

The long-term objective would be towards realignment of interest rates on all types of debt instruments, both the government and private sector, within a narrow band.

RBI has been able to maintain a stable interest rate regime throughout the year with a bias towards further softening of the interest rates, as reflected in the yields on government securities in the secondary market, which ruled much lower than the yields at the beginning of the financial year.

He said that the large market borrowing programme of the government could be completed at a lower cost without unduly affecting the general interest rates.

RBI Governor Bimal Jalan indicated that for the purpose of monetary policy formulation, for the year as a whole, growth rate of real GDP in 2002-03 is placed at 6.0 6.5 per cent, and the rate of inflation is assumed to be slightly lower than 4.0 per cent.

Non-food credit (adjusted for investments) is projected to increase by about 15.0 15.5 per cent which is expected to adequately meet the credit needs of all the productive sectors of the economy.

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